John,
Assuming you disconnected the hose between the expansion tank and the main fill neck (below radiator cap)? If so, does the expansion tank drain out? Understanding that you added distilled water to the main coolant tank and did not change the expansion tank level, would lead me to believe the main coolant tank is below full and the expansion tank is plugged is some way that will let you blow bubbles but coolant is not going in/out of expansion tank.
I would recheck the main tank coolant level (system should be cold) and refill if necessary. Remove the expansion tank, clean the inside to remove any permenant level lines, replace hose with new clear plastic w/clamps and fill to cold line with coolant mixture. Run in diesel mode a couple cycles and see what happens.
Good luck,